More on Kroger (KR) - Harris Teeter (HTSI): The combined grocery operator will have 2,631 supermarkets operating across 34 states with the deal appearing to be focused on squeezing cost savings from the increased scale. Kroger says it will attempt to maintain its 2.00 - 2.20 debt -to-EBITDA ratio after the deal closes by paying down some debt. The narrow 1.8% premium paid to Harris Teeter shareholders is reflective of the 34% runup the stock has seen since the company announced it was exploring strategic alternatives. HTSI +1% premarket to $49.00.

More on Kroger (KR) - Harris Teeter (HTSI): As part of the acquisition, Kroger will assume $100M in outstanding debt but indicates it will continue with its quarterly dividend. The grocery store chain expects to add $0.06 to $0.09 to EPS in accretive value in the first full year after the merger due to the significant cost savings it will churn up.

Kroger (KR) acquires Harris Teeter (HTSI) for $49.38 in a deal valued close to $2.5B. The deal price marks a 33.7% premium over Harris Teeter's closing price the day it announced it was exploring strategic alternatives.

Flowers Foods (FLO) and Mexico's Grupo Bimbo are reportedly set to be the stalking horse bidders for Hostess Brands' bread ops, which the bankrupt company is likely to sell in at least two groups and which could fetch over $350M. Other possible suitors include Wal-Mart (WMT) and Kroger (KR). Wonder Bread, Nature's Pride, Home Pride, Merita and Butternut are among the brands on offer.

Already having a big year, dealmaking in the grocery business is set to jump even more as regional players seek to size up. One firm on the radar screen is Supervalu (SVU), primed for acquisition or break-up as it tries to shed debt from its $12.4B purchase of Albertsons in 2006.

Kroger Co operates retail food and drug stores, multi-department stores, jewelry stores, and convenience stores throughout the United States. It also manufactures and processes some of the food for sale in its supermarkets.